Microsoft will update its sexual harassment policy following the ArentFox report

Microsoft CEO Satya Nadella gestures during a session at the annual meeting of the World Economic Forum in Davos on May 24, 2022.

Fabrice Coverini | AFP | Getty Images

Microsoft It said on Tuesday it would update its sexual harassment and gender discrimination policies after a third-party report found shortcomings in how the company handles complaints.

The report comes a year after Microsoft shareholders approved a motion requiring the board to publish a review of workplace sexual harassment policies. In January, the board of directors authorized the company to hire law firm ArentFox Schiff LLP to review the policies, submit a report, and make recommendations.

Microsoft published a 50-page transparency report from ArentFox on Tuesday. The report is significant in an industry that is making clear efforts to improve diversity and ensure that sexual misconduct is taken seriously. At Microsoft, allegations of harassment and discrimination led to internal discussions spilling over into public opinion.

“The Board of Directors and our senior leaders are fully committed to this implementation plan as we continually bridge the gap between our culture and the lived experience of our employees,” Microsoft CEO Satya Nadella said in a company blog post.

The shareholder proposal was made last year by Arjuna Capital. It followed a report that Microsoft co-founder Bill Gates had walked out of the company’s board of directors after it investigated an allegation that Gates tried to start a relationship with an employee two decades ago.

Such proposals usually fail, and the company has recommended that shareholders vote against it. But she received 77.97% of all votes, according to an organizational filing.

Tuesday’s report referred to the Gates incident and provided some details. Kathleen Hogan is the company’s Chief Human Resources Officer and Executive Vice President.

“On July 7, 2019, Person A, a Microsoft employee, informed Kathleen Hogan that Bill Gates had subjected her to inappropriate communications and behavior,” the transparency report said. By doing so, Person A signaled sexual harassment and the ‘me too’ movement.

Microsoft founder Bill Gates speaks during the Seventh Global Fund Replenishment Conference in New York on September 21, 2022.

Mandel Ngan | AFP | Getty Images

The report said the woman first met Gates in 1999 and they met face-to-face “sporadically” after that. The firm hired a law firm to look into the woman’s assertions and found that she corresponded and communicated. Microsoft president Brad Smith discussed the assurances with Gates, who said the relationship was consensual.

Arjuna Capital said in a statement that the report, citing privacy reasons, does not provide many new details regarding the Gates investigation. But she acknowledged the significant changes Microsoft had agreed to make regarding executive accountability.

Microsoft said in its blog post on Tuesday that it will add language, as suggested in the report, to its anti-harassment and discrimination policy, enhance executive training, re-evaluate terms for confirmed violations of the policy and consider ways to address negative occupational concerns. Impact for those who file complaints.

Microsoft received 721 complaints of discrimination and harassment in the United States between 2019 and 2021, and investigators found most of the allegations to be unfounded, according to the report.

The law firm spoke with some people who came forward with complaints in 2021 and found that many were concerned that their actions or being part of an investigation could hurt their career prospects, even if the complaints are substantiated. Some of these people said their promotions or pay increases were delayed because their alleged harassment or discrimination affected their performance reviews, and they weren’t happy because HR told them there was no way to handle that kind of impact.

Some people interviewed by the law firm said they didn’t like that investigators declared their complaints unfounded and not severe enough to violate Microsoft’s anti-discrimination and harassment policy.

Microsoft said it will provide data each year on reports of harassment, the percentage of allegations that are proven and the company’s responses.

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